A new study by Wharton and the University of Zurich found that 88% of founders in 157,669 U.S. venture-backed startups received no value at exit, while the top 1% captured 79% of all founder proceeds. The research suggests AI could exacerbate this disparity.
TL;DR
- 88% of founders receive no value at exit, top 1% capture 79% of proceeds (Wharton/Zurich study).
- AI may widen the gap due to winner-take-most platforms and larger funding rounds.
- Founders can mitigate this by modeling payouts early, negotiating preference terms, and seeking secondary liquidity.
What happened
The study analyzed 157,669 U.S. venture-backed startups founded between 1987 and 2025, revealing that 88% of founders received no value at exit, while the top 1% captured 79% of all founder proceeds. This pattern has always existed due to power law venture returns, liquidation preferences, and dilution.
AI could widen this gap through winner concentration, where a few AI companies become platforms and most others get commoditized by foundation models. Additionally, capital intensity in frontier-model and infrastructure companies leads to further dilution of founders' shares.
However, there are counterweights such as lower capital needs for many companies, founder-friendly terms, and secondary liquidity options that can help founders retain more value.
Why it matters
For AI/ML developers and startup founders, understanding these dynamics is crucial for negotiating better terms and planning for various exit scenarios. It highlights the importance of modeling payouts early, negotiating preference terms, and seeking secondary liquidity options.
For tech investors, this study underscores the need to consider founder payout structures when evaluating potential investments. It also suggests that the AI landscape may become more concentrated, with a few companies capturing most of the value.
The study also raises questions about the long-term implications of AI on startup ecosystems and whether current trends will continue or if new opportunities will emerge to shift founder payout patterns.
Key facts
- 88% of founders receive no value at exit (Wharton/Zurich study).
- Top 1% of founders capture 79% of all founder proceeds (Wharton/Zurich study).
- Study analyzed 157,669 U.S. venture-backed startups founded between 1987 and 2025.
- Winner concentration in AI could exacerbate the top-1% effect.
- Capital intensity in frontier-model and infrastructure companies leads to further dilution of founders' shares.
- Lower capital needs for many companies can help founders retain more ownership.
- Founder-friendly terms and secondary liquidity options can improve founder economics.
- AI has added to the pressure of longer holding periods before exits.
Context
The study's findings are not new but quantify a structure that has always existed in venture capital. The power law of venture returns, liquidation preferences, and dilution have always meant that common shareholders, including founders, often receive little even when a company sells for a real price.
The AI landscape is reshaping these dynamics, with winner-take-most platforms and capital-intensive frontier-model companies potentially widening the gap between the top 1% of founders and the rest.
However, there are emerging trends that reflect improvements in founder economics, such as lower capital needs for many companies, founder-friendly terms, and secondary liquidity options. These trends could help shift founder payout patterns as the AI market matures.
